A couple of days ago, Grant Thornton launched our 16th annual Corporate Governance Review, in conjunction with ICSA, 25 years after the Cadbury report that was the origin of the UK Code. This blog focuses on two of the review's main themes - risk management and culture - and on their intertwined history, particularly in financial services, in the context of SM&CR.

It's worth remembering that the Cadbury Committee was established in the wake of a series of corporate scandals - including BCCI, Maxwell and Polly Peck - that spanned a diverse array of issues. Moving on, next month will see the 8th anniversary of Sir David Walker's post-crisis review of corporate governance in UK banks. This built on Cadbury, and again came in the wake of series of corporate scandals / failures - including Northern Rock, RBS and HBoS.

The Walker Review made important recommendations around risk management and the role of institutional investors, and both these issues are still alive and kicking, as our review shows. Indeed the latter was one of the themes of Andrew Bailey's (the FCA's CEO) speech on culture in financial institutions earlier this year. This focused on two issues:

1. The flaws of agency theory and the need for boards to see their responsibilities more widely than just shareholders - in essence reinforcing the message of the Stewardship Code, first promulgated by Walker

2. The importance of the accountability regime (SM&CR), now being extended to all FCA regulated firms, as a mechanism of cultural change

I've written separately about both of these, but the point here is that they each have strong threads going back to Cadbury, both in financial services and other sectors, and, while progress has been made, we haven't yet cracked either of them.

SM&CR is the latest attempt to improve corporate culture in financial services, and one of its key challenge for firms will be to capture its impact accurately (not least through risk management - remember that history of corporate failure), in a way that can be monitored effectively at Board level and which takes due account of their wider stewardship responsibilities.

None of this will be easy, and culture is notoriously hard to measure. But SM&CR does provide some prominent hooks that, combined intelligently with other tools, can help firms move forward. To achieve this, it will be important to approach SM&CR not just in the here and now, but also in the context of Cadbury and Walker and the overall direction and vision they defined.

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comprehensive analysis of the FTSE 350’s annual reports finds that full compliance with the UK Corporate Governance Code is at 66%, the highest level ever.